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Dublin - A syndicate of banks has tabled proposals to reduce Independent News & Media's €420m debt burden that would see it take a large equity stake in Ireland's largest newspaper group, the Sunday Times reported.

Weighed down by debts, falling readership and reduced advertising, INM has been in talks with its lenders since last year in relation to debt maturing in May 2014 in the hope of agreeing what it has described as a "substantial" restructuring.

A steering group of banks led by ANZ, RBS and Barclays made the proposals this weekend, with a debt for equity swap and a shareholder contribution forming a central part of the recommendation, the Sunday Times said in its Irish edition, citing unidentified sources.

The shareholder contribution would most likely include a rights issue and possibly a loan from Denis O'Brien, the company's largest individual stakeholder who owns 29.9% of the group, the newspaper added.

A spokesperson for INM could not be immediately reached for comment.

The Dublin-based group was forced to strike a similar deal in 2009 when it handed a near 50% stake to its former bondholders, sold its flagship UK title the Independent and some of its other overseas interests to help secure its future.

In response to its current debt woes, INM last month agreed to sell its South African unit to a consortium of investors for $226m.

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